An executive of a compliance platform has been charged with insider trading involving billions of dollars in stock transactions.

Source: PortaldoBitcoin Original Title: Coinbase executives sued for alleged insider trading Original Link: A group of shareholders from a compliance platform has filed a lawsuit against the company's leadership, accusing them of being involved in a years-long scheme to use privileged information for billions of dollars in corporate stock trading.

The lawsuit was filed in Delaware, accusing certain senior executives and investors of a compliance platform of concealing information for years, involving the company's failure to implement Know Your Customer ( KYC ) regulations and anti-money laundering measures, data breach vulnerabilities, and the extent of regulatory investigations into these issues.

During the period when this information was allegedly concealed from investors, executives of a certain compliant platform (including the CEO and board members) sold $4.2 billion in company stock. The plaintiffs claim that these profits constitute “insider trading” by taking advantage of the “artificially inflated” stock price of the certain compliant platform.

The major American cryptocurrency exchange was previously sued for similar reasons. Last year, a Delaware judge ruled that the main allegations in a 2023 investor-supported lawsuit—claiming that senior executives of a compliance platform handled stocks while concealing relevant public information—were “reasonably conceivable.” The case is currently proceeding slowly through the Delaware judicial system.

A new lawsuit initiated by shareholders was made public shortly before Thanksgiving, focusing on alleged issues known internally by a compliance platform, which subsequently led to a drop in the company's stock price.

Settlement Agreement of a Certain Compliant Platform in the United States

For example, at the beginning of 2023, a compliant platform reached a settlement agreement of $100 million with the New York Department of Financial Services due to “significant deficiencies” in its anti-fraud and anti-money laundering practices. The lawsuit claims that for years, despite being aware that the leadership of the compliant platform was under investigation for such deficiencies, they continued to make false and misleading statements regarding the exchange's security and legal compliance.

Another example is that the lawsuit claims that employees of a certain compliance platform were aware as early as January of this year that hackers had obtained sensitive personal information from clients of the exchange, targeting third-party customer service providers. The data breach was not disclosed until May, several months later.

“These distortions and significant omissions were made intentionally or recklessly, with the purpose and effect of artificially inflating the price of certain compliant platform securities,” the plaintiff claims.

Shareholders of a certain compliant platform not only seek billions of dollars in compensation but also seek a seat on the company's board of directors and greater participation rights in board policies and guidelines.

A certain compliant platform did not respond immediately to the request for comments on the case.

Last month, the company announced plans to relocate from Delaware to Texas, a state with a more favorable attitude towards cryptocurrency. In a commentary explaining this decision, the legal director of a compliance platform—who is also another defendant accused in the new lawsuit—cited the Delaware judicial system as a key factor in the company's departure from the state.

“The legal framework in Delaware has long provided consistency for companies,” he said. “But that has come to an end. In recent years, the Delaware Supreme Court has been characterized by unpredictable outcomes.”